While debates about how to promote jobs and economic growth while tackling the deficit have dominated the political conversation for the past year, an effective strategy for boosting the economy without increasing government spending or adding a dime to the debt has been largely ignored: raising the minimum wage.
Some will argue that we cannot raise the minimum wage now because it would lead to further job losses. But the best academic research shows otherwise. Research shows that low-wage employers typically experience very high rates of employee turnover and struggle constantly to fill their job vacancies. A higher wage makes it easier for employers to attract and retain workers and is likely to reduce the costs of absenteeism, while giving employers the productivity benefits of more experienced workers.
Raising wages for the nation’s lowest-paid workers puts money into the hands of people who spend their incomes at the highest rates, boosting demand for goods and services. A home health aide who gets a modest bump in her salary can buy another gallon of milk, a new coat for winter, and get the haircut she’s been putting off for months.
At a time when families are struggling, helping workers keep a job and put more money in their pockets makes sense. The Chamber of Commerce and lobbyists for the fast food and restaurant industry will likely say that we can’t raise wages without cutting jobs. But the best scientific research tells us otherwise.
Our economy is crying out for a large infusion of public spending to get people back to work. But while Democrats and Republicans battle on Capitol Hill, Minnesota can step up and help residents weather this crisis by increasing its minimum wage.
Michael Reich
Berkeley, California
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